Validity Of Restraint Of Trade Agreements

A court must, when assessing the appropriateness of a deference, issue a value judgment with two essential political considerations. First, the public interest requires the parties to comply with their contractual obligations, a concept that emerges from the maxim pacta servanda sunt. Second, all persons should be productive in the interest of society and be allowed to work in trade and commerce or in ales professional manners. These two considerations reflect not only the common law, but also constitutional values. The following questions were asked in the case of Vodacom (Pty) Ltd/Motsa and Another (J 74/16) [2016] ZALCJHB 53. Vodacom was awarded the contract of an executive that included six months` notice and a commercial restriction for a further six months after the notice period expired. If you are an employer who needs to develop your employment contracts and evaluate your trade clause, or if you are an employee who must sign such documents, speak to an experienced labour lawyer first. Our labour and labour law team is competent and experienced and advises you on the best way to proceed. The main intent of this provision is to protect the employer`s own interests – including trade secrets, confidential information and, of course, customers and customers – from trespassing into the hands of the competitor. This followed in Broad v Jolyffe[5] and Mitchel v Reynolds,[6] where Lord Macclesfield asked, « What does it mean for a craftsman in London what does another do in Newcastle? » In these times of such slow communication and trade throughout the country, it seemed axiomatic that general restraint did not fulfil any legitimate purpose for business and should not be valid.

But as early as 1880 Lord Justice Fry in Roussillon[7] declared that unlimited restraint in space should not be obsolete, for the real question was whether it went beyond what is necessary to protect the promise. In Nordenfelt,[2] Lord Macnaghten decided that if one could validly promise « not to make weapons or ammunition anywhere in the world, » it was an unseemly reluctance to « not compete in any way with Maxim. » This approach in England was confirmed by the House of Lords in Mason against The Provident Supply and Clothing Co. [8]. A contractual undertaking that does not act is non-contractual and is unenforceable against the promisor, as it is contrary to public policies of commercial promotion, unless the commercial restriction is appropriate to protect the interests of the purchaser of a business. [2] Trade restrictions may also occur in restrictive agreements under an employment contract. When a court is to determine the adequacy of a trade clause, it must make a value judgment on the two main political considerations. If a staff member has access to confidential information and has the opportunity to disclose it, the first two requirements are met. Whether there is an alternative remedy takes into account the relevance of limiting the trade agreement and balancing competing interests. When formulating a restriction on the trade agreement, it is necessary to determine the protective interest of the party and the level of protection required, and then to formulate the provision relating to protection and no longer to the guarantee of adequacy.

A restriction of the trade agreement is imposed by a request for a provisional or final ban. Inappropriate deference is contrary to the public interest and is therefore not applicable. The relevance of a trade clause or trade agreement is assessed on two bases: the interests widely expressed by the Community and the interests of the parties themselves.